Investment update 6 August 2018

Last week in the markets

Over the past week Australian shares lost 1% with small company shares falling 0.9%. Shares in developed countries were flat while the US market was up 0.8%. Shares in emerging markets fell 1.7%. The Australian dollar rose 0.1% to 74.04 US cents. The Australian 10-year bond yield increased to 2.73%, with the US 10-year bond yield remaining at 2.95%. The oil price fell 0.3% to 68.49 US dollars per barrel.

Apple becomes the first trillion-dollar company

Last week saw Apple become the first company to reach a market capitalisation (the total value of all its listed shares) of one trillion US dollars.

A trillion US dollars is a large amount of money, that is $1,000,000,000,000! To put this in perspective:

If Apple was a country, it would be the 27th richest, just behind Pakistan and ahead of Malaysia.

Apple is worth approximately two-thirds of the combined market capitalisation of all of Australia’s listed companies.

This amount would buy one billion iPhone Xs.

It’s interesting to note that Apple’s valuation doesn’t appear to be extreme. It’s currently trading at a price to earnings ratio* of about 18.8. Apple has achieved much of the growth in its share price through increasing its earnings.

We’ve had significant exposure to Apple for a long time, helping our members benefit from its share price growth. Apple is currently the sixth largest share-holding in our portfolios. Our appointed fund managers closely watch changing corporate strategies, innovations, and market trends to bring the best results for our members.

Signing off

David Bell | Chief Investment Officer

* The price-earnings ratio (or P/E ratio) measures a company’s share price relative to its earnings. It shows the money investors are willing to pay for each dollar of a company’s earnings. For example, a P/E ratio of 10 would mean an investor is willing to pay $10 for a dollar of earnings.

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